For most organisations, managing credit and debt collections can be a time consuming, costly and complex process.It’s viewed as a necessary but negative and thankless task. An experience that everyone would like to avoid. Yet it’s a key moment in the life cycle of a customer and how it’s handled can have a tremendous impact on your brand.
Not all delinquent customers are bad customers. A large proportion have simply fallen on difficult financial times. Some may be dragging their feet in paying, due to a service issue or unresolved complaint. Adopting a rigid, one-size-fits-all approach to all debtors, is likely to provide a poor experience for the customer while achieving little to reduce the level of outstanding debt.
Just as with areas of the customer experience such as sales and service, debt collections can benefit from technology and data analytics that offer greater personalisation.
The challenges and the opportunities
The growth of mobile and prepaid phones, matched with the diminishing use of residential land lines, has raised new challenges for collectors. Mobile phone users can easily avoid contact by diverting calls to voicemail, or swapping out their phone’s SIM card to get a new number. Also, telco providers regularly recycle numbers to new customers. Creditors must be more careful to verify right-party contact and maintain accurate contact information.
Yet, mobility, supported by the relevant technology and processes, can offer a very automated and scalable means of collections. The quickest and most scalable is sending an automated text or email to a mobile phone. Sending undifferentiated texts to all delinquent customers is far from ideal, however. There’s no visibility to whether these messages were received or even sent to the right number.
Use of data analytics in collections
Analytics, business rules and workflows should be established to segment delinquent populations based on credit risk. Leveraging data analytics they can also determine which channels and actions are most likely to be effective based on the customer risk profile and the results of past contacts.
Creditors now have access to more data about their customers. Data analytics allows intelligence to be gleaned from that data showing each customer’s journey from the opening of their account to when they become delinquent. Based on this intelligence creditors can assess the best contact strategy for each customer at a certain point in time.
Over the past decade, technological, social and economic changes have had a profound impact on collections and recovery operations. Organisations need to adapt to one or more of these developments:
- The prevalence of mobile phones increasing competition in the race for payment share
- Complex, changing regulations
- The impact of social media
- Evolutions in consumer attitudes toward debt
- Rising consumer use of the Internet for financial transactions
Don’t rely on the same strategies and processes that have been deployed in the past. Think about your customer and their experience. Just as awareness of the customer’s experience can be critical to sales, it can greatly assist with debt collections.